What activities are prohibited for Focalpoint Coaching franchisees regarding Competitive Businesses?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee therefore agrees that, during this Agreement's term and any renewal term, and unless Franchisor provides prior written consent in its sole discretion, neither Franchisee, any of Franchisee's owners, nor any of Franchisee's or Franchisee's owners' spouses will:
- (a) have any direct or indirect controlling or non-controlling interest as an owner – whether of record, beneficially, or otherwise – in a Competitive Business, wherever located or operating (except that equity ownership of less than two percent (2%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (b) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- (c) divert or attempt to divert any actual or potential business or client of the Franchised Business or any FocalPoint Franchised Business to a Competitive Business; or
- (d) engage in any other activity which, in Franchisor's sole opinion, might injure the goodwill of the Marks or Franchise System.
The term "Competitive Business" means (i) any business which derives more than twenty percent (20%) of its revenue from selling business training or business consulting services and/or selling products similar to the Proprietary Products or (ii) any business granting franchises or licenses to others to operate the type of business specified in subparagraph (i) (other than a FocalPoint Franchised Business operated under a franchise agreement with Franchisor).
Franchisee agrees to obtain similar covenants from the personnel Franchisor specifies, including officers, directors, managers, Associates and other employees attending Franchisor's training program or having access to Confidential Information. Franchisor has the right to regulate the form of agreement that Franchisee uses and to be a third party beneficiary of that agreement with independent enforcement rights.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, franchisees face several restrictions regarding involvement with competitive businesses during the term of their agreement. Unless Focalpoint Coaching provides prior written consent, a franchisee, their owners, or their spouses are prohibited from having any direct or indirect controlling or non-controlling interest in a Competitive Business. An exception exists for equity ownership of less than 2% in a Competitive Business if its stock is publicly traded on a recognized United States stock exchange.
Franchisees are also prohibited from performing services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business. They cannot divert or attempt to divert any actual or potential business or client of the Franchised Business or any Focalpoint Coaching Franchised Business to a Competitive Business. Furthermore, franchisees are barred from engaging in any activity that, in Focalpoint Coaching's opinion, might injure the goodwill of the Marks or Franchise System.
A "Competitive Business" is defined as any business deriving more than 20% of its revenue from selling business training or consulting services, selling similar products, or granting franchises or licenses to others to operate a similar business (excluding other Focalpoint Coaching franchises). Franchisees must also ensure that their personnel, including officers, directors, managers, Associates, and other employees attending Focalpoint Coaching's training program or having access to Confidential Information, agree to similar covenants. Focalpoint Coaching retains the right to regulate the form of agreement used and to be a third-party beneficiary with independent enforcement rights.
These restrictions are typical in franchising to protect the brand and prevent franchisees from using the franchisor's knowledge and resources to benefit a competing business. Prospective Focalpoint Coaching franchisees should carefully consider these limitations and ensure they do not conflict with any existing business interests or future plans.